Step 4 – Develop Your Customer Theory

Business Planning Start-Up Guide

Unless you are actively working within an industry or a product or service, you only have an inkling about who your customers are and what they’re seeking. In this phase, you will create a “theory” on what your customer wants or needs and who they are.

girls-in-paint

Who is your customer?

 

Your Market

Too many “amateur” start ups fail to pick a market demographic. They want to serve anyone who’ll pay. However, when they use this tactic, they’re essentially forcing their potential customers to seek someone else. They have a need or a pain and they want to satisfy it with someone or something.  

If there’s a hundred car dealers in your area, why would they choose you? Especially if you’re the new kid on the block. Instead, when they look for a car dealer, give them something to find. In Boise, Idaho, there is a very successful car dealer named, “Fairly Reliable Bobs” It’s obvious he’s a used car dealer. He even has an outlet for only one model of Chevrolet – Corvettes!  So, if you’re looking for a Corvette, you go to Bobs.  (Update:  Fairly Reliable Bobs is still the place for Corvettes, but he has since succumb to the temptation to sell other sports cars – he’s now the place for performance sports cars.)

Determine your market and don’t say, “For all your car buying needs” or plumbing, lighting, real estate, etc. “needs” either.

Again, what pain point or “thing” is your customer trying to solve or resolve? Get out a piece of paper and determine who your customer is – make a guess if you don’t know it. You can refine it later.

Ask what are they seeking?  Write out:

  • Customers’ demographics (gender, age, income level, etc.)
  • Customers’ geographics or scope (locally, in your state, within your country, or internationally)
  • What are your really good at? Are they seeking that?
  • What are lots of people seeking?
  • What will make you different?

Caution:  Don’t get so specific that your “product” appeals to such a tiny market that you cannot make a living at it, either. In larger metro areas you might be able to really niche a product. In rural areas, you may go bankrupt.

It’s best to know your industry and know it well. You can get some information at these resources:

  • Again, use your industry knowledge (if you work in this industry)
  • The U.S. Census Bureau web site – this has a lot of demographic data by zip code, city, state, and for many categories, such as earnings, gender, head of household, race, and more
  • The U.S. Department of Commerce – data on sales, income, home sales, international trade, and more
  • U.S. Housing and Urban Development
  • State resources
  • Wikipedia is a great source for data (specify state, city and other)
  • Web search (Google, Bing, others)

 

Leave a Comment - Let's Start a Conversation!